The decision to downgrade France's ratings to Aa3 reflects our view that France's public finances will be substantially weakened by the country's political fragmentation which, for the foreseeable future, will constrain the scope and magnitude of measures that could narrow large deficits.
Looking ahead, there is now very low probability that the next government will sustainably reduce the size of fiscal deficits beyond next year.
Bayrou now faces the challenge of getting on board a divided legislature and formulating a 2025 budget which can contain the economic turmoil.
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